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There are two different discussions going on right now on the ABMP and Massage Mag LinkedIn groups regarding Groupon. If you don’t know what Groupon is, check it out at www.groupon.com.

I’m not here to advocate the use of Groupon or steer you away from it.  I just know that services like this are being used by therapist with varying results. Therefore, I felt it important to open up the discussion so we can all learn more about this promotional concept from those that have used it.

Allow me to weigh in first with some input based on my observations of some of the experiences our clients and prospective clients are having:

A)     “My phone is ringing off the hook!” (This is what we are hearing from prospective clients calling looking for a solution to deal with their crazy call volume).

It seems that the response you can get from running a Groupon promotion can be very high (200 to 1200 Groupons sold in a day). Which means: That once your Groupon (coupon) is posted you can expect a flood of calls coming in. Not being prepared to absorb the increased call volume can create a problem.

B)      “All I am doing is discounted appointments!”

The other issue that I see happening is if you do not limit the times when someone can us their Groupon, you can end up giving $18 one hour massage (a $60 massage offered at $30 and then the 40% Groupon fee taken out) until  you fade off into the sunset.

Offering the ability to allow clients to schedule online and then having the criteria that all Groupons must be scheduled by the client online, can resolve ‘A’. Limiting their ability to only schedule on certain times on certain days can resolve ‘B’. We have a client that only allows two appointments per shift for 9 out of his 16 therapists to be scheduled with a Groupon. The calendars for these 9 therapists have Groupon appointments booked almost to the end of the year.

That's all I know. So please share your Groupon experience if you have one. Hopefully the folks on LinkedIn that have shared their experiences there will jump in here.

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Looked at the site, there ten or so deals being advertised at a time per area. No search feature to filter through all the crap your not interested in. Looks like a receipt to fill your email in box with spam if you ask me. Don't get me wrong, coupons are great, but only if they are relevant to what you want.
I would suggest to all LMT's to better use the text message marketing campaign instead of groupon! :)

A Possible Chink in the Deal Site's Discount Armor

 

As you probably know, Groupon and most of it's competitors sell a voucher for a specific service or package of services to be redeemed at any time during the valid redemption period -- usually 60 - 90 days. They command a 50% discount on their offers and take half of what is left, leaving the merchant with just 25% of their list price revenue.

 

Compare this business model with the original discount websites -- Hotwire, Hotels.com etc.

 

#1 major difference -- the travel industry is selling perishable things. once that plane leaves, you can't sell the seat. Once the date on the calender changes, the unsold hotel room is lost forever.

 

If they see inventory unlikely to sell, they put it on sale via one of these discount sites.  In the industry, this is known as yield management. Try to maximize your revenue each and every day based on demand, by modifying your pricing.

Spa services / massage appointments are the same. once the hour passes, it is a missed revenue opportunity. The one difference is Spas don't raise their prices at peak times, whereas hotels and airlines really don't have a list price, which is why the same hotel room can be $500 one day and $200 the next.

 

Clients are willing to endure all sorts of restrictions to get the best deal -- Hotwire can make you change planes twice to get to LA, hotels give you a room of unknown bedding or location, airlines make you purchase the ticket 2 weeks in advance, stay over a Saturday night and pay through the nose if you want to change your plans.

 

So why are spa services being sold via voucher instead of a yield management system?

 

For nearly a year, we have been working with a yield management system for spa services for our NYC spas. Each morning we can post open, and unlikely to be sold, appointments for specific services at specific times at whatever discount we think will help sell the slot -- usually 40 -50%, much like the deal site voucher discounts.

 

But WE are in control of when they are redeemed, since we are selling the slots WE need to fill, not a voucher for a client to use when it is convenient for them. No trying to figure out of they are on a deal site voucher to steer them when we need them to come in -- we sell a slot and the client buys that time and service. We control the outcome 100% of the way.

 

Like other yield management systems, their are significant restrictions on the offer -- the service is not changeable nor is the time. And if they client does not show up -- tough -- it is a non-refundable purchase.

 

Unlike Groupon Now, which has offers valid for an entire day, yield management allows you to focus on the slots you need sold, plus it does not take 50% of remaining revenue.

 

And as an added bonus, the yield management system only takes 15% of the merchant's remaining revenue -- and that includes the Credit Card processing fee!!

 

Last weekend, our yield management partner did a trial offer with GiltCity, one of the largest deal site subscriber bases in NYC and certainly amongst the most high end. GiltCity had always sold vouchers -- like everyone else in their space -- and could not get their head around yield management offerings and was unsure if their clients would be willing to buy a specific service at a specific time instead of the open ended voucher.

 

Though the trial was not 100% in the traditional business model -- usually we can take down an offer if a full-price customer books the slot and instead of posting the day before, we posted inventory for Friday Saturday & Sunday that was released on Friday morning (they were not using the yield management software engine, but a manual proces to bridge the too), the results were astounding.

 

95% of our offers sold within two hours of being posted, and the average discount was 45%. The only things not selling were a couple of service at the earliest possible time -- jsut 3 hours after the offers were released -- 1pm on Friday massages are hard to sell to locals.

 

The 6 other spas participating in the trial had similar results.

 

Which begs the question --- if clients are willing to purchase yield managed/restricted appointments at a 40-50% discount, why would merchants offer a 40-50% discount on an open ended voucher? This test proves quite conclusively that the deal seeking public is willing to accept fairly stringent restrictions on this level of discount.

 

Think back to the airlines -- more restrictioins, bigger discount. Fewer restrictions, higher prices.

 

It will be interesting to see how GiltCity proceeds with a yield management business model, but I think they might be a little scared of what it means to their core business model. And all deal sites should be.

 

I think as word gets out to merchants that yield management works measurably more favorably for merchants than the voucher model, the tide of heavily discounted vouchers will start to ebb in favor of the merchants. once a yield management platform builds a large enough customer base to deliver these kinds of results, the deal sites will have to rethink their approach or risk losing service industry clients in droves.

 

yield management helps the merchant control the outcomes -- vouchers should be a 25% discount at most -- not unlike buying a series or package used to be. Hopelfully that day is not too far away.

 

I have thought about that approach time ago too, giving discounts only in the slots you need to fill in having the control. Some therapists they are actually doing it through the text messaging campaign, they offer deals with a specific time and day only. That's what is growing a lot now in marketing. The therapist is in total control of the deals without giving any percentage to a middle man. Only pays a fixed monthly amount to the text messaging company and that's it. There are a lot right now that have many plans. 

The company that has that business model of "yield/management" has to be on the top of google, that everybody knows about it. Otherwise, I think is worthless. Groupon is making a lot of money because they are on top of search engines and the lot of advertisement they do, and people hire groupon for exactly that exposure.

 



Relax & Rejuvenate said:

A Possible C**** in the Deal Site's Discount Armor

 

As you probably know, Groupon and most of it's competitors sell a voucher for a specific service or package of services to be redeemed at any time during the valid redemption period -- usually 60 - 90 days. They command a 50% discount on their offers and take half of what is left, leaving the merchant with just 25% of their list price revenue.

 

Compare this business model with the original discount websites -- Hotwire, Hotels.com etc.

 

#1 major difference -- the travel industry is selling perishable things. once that plane leaves, you can't sell the seat. Once the date on the calender changes, the unsold hotel room is lost forever.

 

If they see inventory unlikely to sell, they put it on sale via one of these discount sites.  In the industry, this is known as yield management. Try to maximize your revenue each and every day based on demand, by modifying your pricing.

Spa services / massage appointments are the same. once the hour passes, it is a missed revenue opportunity. The one difference is Spas don't raise their prices at peak times, whereas hotels and airlines really don't have a list price, which is why the same hotel room can be $500 one day and $200 the next.

 

Clients are willing to endure all sorts of restrictions to get the best deal -- Hotwire can make you change planes twice to get to LA, hotels give you a room of unknown bedding or location, airlines make you purchase the ticket 2 weeks in advance, stay over a Saturday night and pay through the nose if you want to change your plans.

 

So why are spa services being sold via voucher instead of a yield management system?

 

For nearly a year, we have been working with a yield management system for spa services for our NYC spas. Each morning we can post open, and unlikely to be sold, appointments for specific services at specific times at whatever discount we think will help sell the slot -- usually 40 -50%, much like the deal site voucher discounts.

 

But WE are in control of when they are redeemed, since we are selling the slots WE need to fill, not a voucher for a client to use when it is convenient for them. No trying to figure out of they are on a deal site voucher to steer them when we need them to come in -- we sell a slot and the client buys that time and service. We control the outcome 100% of the way.

 

Like other yield management systems, their are significant restrictions on the offer -- the service is not changeable nor is the time. And if they client does not show up -- tough -- it is a non-refundable purchase.

 

Unlike Groupon Now, which has offers valid for an entire day, yield management allows you to focus on the slots you need sold, plus it does not take 50% of remaining revenue.

 

And as an added bonus, the yield management system only takes 15% of the merchant's remaining revenue -- and that includes the Credit Card processing fee!!

 

Last weekend, our yield management partner did a trial offer with GiltCity, one of the largest deal site subscriber bases in NYC and certainly amongst the most high end. GiltCity had always sold vouchers -- like everyone else in their space -- and could not get their head around yield management offerings and was unsure if their clients would be willing to buy a specific service at a specific time instead of the open ended voucher.

 

Though the trial was not 100% in the traditional business model -- usually we can take down an offer if a full-price customer books the slot and instead of posting the day before, we posted inventory for Friday Saturday & Sunday that was released on Friday morning (they were not using the yield management software engine, but a manual proces to bridge the too), the results were astounding.

 

95% of our offers sold within two hours of being posted, and the average discount was 45%. The only things not selling were a couple of service at the earliest possible time -- jsut 3 hours after the offers were released -- 1pm on Friday massages are hard to sell to locals.

 

The 6 other spas participating in the trial had similar results.

 

Which begs the question --- if clients are willing to purchase yield managed/restricted appointments at a 40-50% discount, why would merchants offer a 40-50% discount on an open ended voucher? This test proves quite conclusively that the deal seeking public is willing to accept fairly stringent restrictions on this level of discount.

 

Think back to the airlines -- more restrictioins, bigger discount. Fewer restrictions, higher prices.

 

It will be interesting to see how GiltCity proceeds with a yield management business model, but I think they might be a little scared of what it means to their core business model. And all deal sites should be.

 

I think as word gets out to merchants that yield management works measurably more favorably for merchants than the voucher model, the tide of heavily discounted vouchers will start to ebb in favor of the merchants. once a yield management platform builds a large enough customer base to deliver these kinds of results, the deal sites will have to rethink their approach or risk losing service industry clients in droves.

 

yield management helps the merchant control the outcomes -- vouchers should be a 25% discount at most -- not unlike buying a series or package used to be. Hopelfully that day is not too far away.

 

Why did you use asterisks in your posts title?

 

Asterisks?

The yield-management model sounds interesting.  It's like bidding for something.  Those who really want the appointment slot or a certain therapist will be willing to pay a higher price to secure it ahead of time; the ones who don't mind taking the chance at missing the appointment pay a lower price.  The therapist or spa gets a good chance of booking their appointments based on market demand and get compensated based on that.

It seems that this model promotes market efficiency, with demand and supply determining price.  It rewards better slots and therapists with higher gains, gives clients flexibility, keeps therapists and spas occupied.  

The only missing thing, as Angela said, is getting the masses to know about the system. 

Relax & rejuvenate, like Alexei asked, what do the asterisks mean?

Hi Gang,

You can do similar yield management with your schedule simply by charging more for your prime time slots, and funneling Groupon or other deal buyers into the slow times you want filled.

 

I've always said we as an industry need to change the paradigm of how we package and sell our services, the problem is that most therapists and massage instructors are not business-minded so these new-thinking concepts are lost on them.

 

ABMP asked me to write an article for their Massage and Bodywork magazine regarding massage therapist's use of deal sites. It will be published in the Jan/Feb issue (keep an eye out for it, even though it is a ways away :) I think it will be helpful and enlightening for many.

 


I hope you said all the bad things too about Groupon and groupon-alike sites!

 


Irene Diamond, RT said:

Hi Gang,

You can do similar yield management with your schedule simply by charging more for your prime time slots, and funneling Groupon or other deal buyers into the slow times you want filled.

 

I've always said we as an industry need to change the paradigm of how we package and sell our services, the problem is that most therapists and massage instructors are not business-minded so these new-thinking concepts are lost on them.

 

ABMP asked me to write an article for their Massage and Bodywork magazine regarding massage therapist's use of deal sites. It will be published in the Jan/Feb issue (keep an eye out for it, even though it is a ways away :) I think it will be helpful and enlightening for many.

 

Angela,

I don't think Groupon or the other deal-sites, are inherently bad- BUT...

therapists need to know exactly how to do them. If it's done right- it can be very worthwhile for some quick revenue generation and client acquisition, again, though the deal site has to be picked for the therapist's brand and the structure has  to be negotiated correctly.

Then I don't think that will be an impartial and complete article about it. 

So far, I liked what Bob Phibbs has said about Groupon


Irene Diamond, RT said:

Angela,

I don't think Groupon or the other deal-sites, are inherently bad- BUT...

therapists need to know exactly how to do them. If it's done right- it can be very worthwhile for some quick revenue generation and client acquisition, again, though the deal site has to be picked for the therapist's brand and the structure has  to be negotiated correctly.

I did not post any asterisks -- the word I typed was CHINK....but I think I am a victim of the PC police which edited my word for me.

 

Reminds me of when Newspapers went PC and changed their spell checks. Lots of business stories had some embarassing substitutions, especially when focusing on improved business results. Several stories at the Philly Inquirer stated how the business was "back in the African American". Boy, were they Native American Faced over that!

But anyhow...

 

Text messaging your own deal for yield management is one method, but it only reaches current customers.

The main alleged value of the deal sites is in bringing in new customers.

 

i think deal sites ARE inherently bad for several reasons -- and not just in our industry

#1 -- the economics are poor for the merchant, especially if they are not a sole practitioner, Downright money losers in most cases.

#2 -- send a bad message to the buying public. Too many are too accustomed to jumpin from one deal to the other and works against customer loyalty (sure, they loved your massage, but not at that price). There are plenty of discount massage places and facial too. If you can't afford it, go somewhere you can afford.

#3  - customer acquisition costs turn out to be very high, when you figure the % of people that actually repeat vs. the number of services you did not have to lose money or on discount so highly (same problem with SpaWeek -- your regulars rush in to get the $50 treatments and skip the full price service they would have done +/- the 7 days around Spa Week)

 

#4 - Not many are interested in their merchant partners. The deal site makes money on all the deals, even if the merchant does not. They are not partners, they are parasites, willing to kill their host and move on to the next.  Merchants can exists without deal sites, but deal sites CAN'T exist without merchants. ABout time they started acting like it.

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